Diminishing marginal rate of substitution implies that the marginal rate of substitution
A. falls as one move to higher (northeast) in the indifference curve map.
B. falls as one travels down (eastward) on an indifference curve.
C. rises as one travels down (eastward) on an indifference curve.
D. stays the same as one travels down (eastward) on a typical indifference curve.
Answer: B
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If the total revenue collected by the federal government in a particular year is $1.2 billion and the total amount spent by the government during the same year is $3.8 billion, what is the budget deficit?
A) $1.6 billion B) $2.6 billion C) $2.2 billion D) $5 billion
The theory of land rent holds that
A. all plots of land are identical. B. all land yields a positive rent return. C. rent on any piece of land will equal the difference between the cost of producing the output on that land and the cost of producing it on marginal land. D. competition for superior plots of land will force the rent on those lands to a marginal return of zero.
Refer to the above graph. A monopolistically competitive firm was initially successful, but then its rivals started an advertising campaign that undercut its market position. This situation would cause the demand curve for the monopolistically competitive firm to shift from:
A. B to A and become more elastic. B. B to A and become less elastic. C. A to B and become more elastic. D. A to B and become less elastic.
If a one percent increase in the price of oranges leads to a five percent increase in the quantity supplied, the price elasticity of supply for oranges is ________.
A. 1/2 B. 5 C. 1/5 D. 2